Sunday, 20 December 2015

Banking Awareness : Know about WTO and its Predecessor

World Trade Organisation(WTO) – International Trade

Banking Awareness : Know about WTO and its Predecessor

Dear
mm experts, We are presenting you a a brief article on WTO (World Trade
Organization) and its Predecessor. Article is useful for various bank
exams, insurance exams & SSC CGL exam.

The WTO's predecessor,
the GATT, was established on a provisional basis after the Second World
War in the wake of other new multilateral institutions dedicated to
international economic cooperation - notably the "Bretton Woods"
institutions now known as the World Bank and the International Monetary
Fund.

The
original 23 GATT countries were among over 50 which agreed a draft
Charter for an International Trade Organization (ITO) - a new
specialized agency of the United Nations. The Charter was intended to
provide not only world trade disciplines but also contained rules
relating to employment, commodity agreements, restrictive business
practices.

The
World Trade Organization (WTO) is an organization that intends to
supervise and liberalize international trade. The organization
officially commenced on 1 January 1995 under the Marrakech Agreement,
replacing the General Agreement on Tariffs and Trade (GATT), which
commenced in 1948.

The
formation of the World Trade Organisation (WTO) in 1995 was a watershed
development in the sphere of international trade. It was a major
advancement in the multilateral trade regime, with the previous regime
embodied in the form of a treaty known as the General Agreement on
Tariffs and Trade (GATT).

The
WTO’s predecessor, the General Agreement on Tariffs and Trade (GATT),
was established after World War II in the wake of other new multilateral
institutions dedicated to international economic cooperation – notably
the Bretton Woods institutions known as the World Bank and the
International Monetary Fund.

GATT
was signed in 1948 and had close to 30 member countries. Its primary
objective was to see that impediments to international trade — mainly in
the form of tariffs — were reduced or removed in order to facilitate
the movement of goods across borders. In the course of six to seven
rounds of negotiation, it succeeded in getting countries to lower their
tariff rates, thus enabling greater movement of goods.

The
end of the Uruguay Round (UR) resulted in the formation of the WTO,
which established a substantial set of rules regarding trade in goods —
including agricultural goods, included agreements on trade in services
and on trade-related aspects of intellectual property rights, as well as
a strong and comprehensive mechanism to settle trade disputes between
member countries

WTO’s
current Director-General is Roberto Azevêdo, who leads a staff of over
600 people in Geneva, Switzerland. A trade facilitation agreement known
as the Bali Package was reached by all members on 7 December 2013, the
first comprehensive agreement in the organization’s history.

Functions of World Trade Organisation (WTO)

Its
main function is to ensure that trade flows as smoothly, predictably
and freely as possible. Among the various functions of the WTO, these
are regarded by analysts as the most important:

Monitoring national trade policies

Technical assistance and training for developing countries

Cooperation with other international organizations

It oversees the implementation, administration and operation of the covered agreements.

It provides a forum for negotiations and for settling disputes.

The
procedures for the appointment of the WTO director-general were
published in January 2003. Additionally, there are four deputy
directors-general. As of 1 October 2013, under director-general Roberto
Azevêdo, the four deputy directors-general are Yi Xiaozhun of China,
Karl-Ernst Brauner of Germany, Yonov Frederick Agah of Nigeria and David
Shark of the United States.

Objectives of World Trade Organisation (WTO)

The
World Trade Organization (WTO) deals with the global rules of trade
between nations. Important objectives of WTO are mentioned below:

To implement the new world trade system as visualised in the Agreement;

To
ensure that developing countries secure a better balance in the sharing
of the advantages resulting from the expansion of international trade
corresponding to their developmental needs.

To enhance competitiveness among all trading partners so as to benefit consumers and help in global integration;

To increase the level of production and productivity with a view to ensuring level of employment in the world;

To improve the level of living for the global population and speed up economic development of the member nations.

Revision Notes Banking Awareness Now for WTO:

The objectives of GATT are as follows:

1. To encourage full employment and large and steadily growing volume of real income and effective demand.

2. To improve the world production and exchange of goods.

3. To ensure the full use of world resources.

4. To ensure a steady improvement in the living standards of people in member countries.

5. To settle the disputes through consultation within the framework of GATT.national investment and services.

GATT Rounds:

Between
1947 and 1995 there were 8 rounds of negotiations between the
participating countries. The first 6 rounds were related to curtailing
tariff rates, 7th round included the non-tariff obstacles.

The
8th round was entirely different from the previous rounds because it
included a number of new subjects for consideration. This 8th round
known as “Uruguay Round” became most controversial. The discussions at
this round only gave birth to World Trade Organization (WTO).

The major defects of GATT are as follows:

1. No Enforcement Authority:

The
GATT has attempted to prescribe an international code of conduct in the
sphere of trade. But there was no enforcement authority to oversee the
compliance of GATT regulations by contracting parties and to settle
their trade disputes.

2. Problems in the Formulation of General Rules:

The
members of GATT are much diversify in nature, they had varied in
economic and political motives and they were also at different stages of
development. These reasons created difficulty in framing and
implementing uniform general rules of conduct concerning trade, tariffs
and payment.

3. Less Benefits for the LDC’s:

The
most of the members of GATT were in the category of the LDC’s. The GATT
had provided less benefit to these countries. At present, there are
more restrictive trade arrangements in the world. The
Commodity-to-Commodity based approach has proved to be detrimental to
the interests of LDC’s.

This
approach creates difficulty in their future planning of production and
exports. The GATT also not given any compensation to the less developed
countries on account of damage to their economies caused by the actions
of developed countries.

4. Quantitative Trade Restrictions:

The
GATT had certainly ensured the sealing down of tariff structure but the
quantitative trade restrictions remained for a long time outside the
GATT ambit. Consequently, the developed countries had used with impunity
the quantitative trade restrictions such, as import quotas, export
subsidies, voluntary export restraints, health and safety regulation
etc.Even though the 1993, agreement of GATT disapproved the adoption of
quantitative trade restrictions and the substitution of tariffs in their
place, it did not prohibit the contracting parties from taking recourse
to them.

Dunkel Proposals:

The
8th round GATT popularly known as Uruguay round was started in
September 1986. The negotiations were expected to be concluded in 4
years but on account of differences among participating countries on
certain critical areas, agreement could not be reached. To remove this
deadlock Mr. Arthur Dunkel, Director General of GATT, compiled a very
detailed document, popularly known as Dunkel Proposals. This proposal
culminated into the Final Act on December 15, 1993. India signed this
proposal on April 15, 1994. All 124 members the countries signed on this
agreement.

WTO

The
World Trade Organization (WTO) is the only global international
organization dealing with the rules of trade between nations. At its
heart are the WTO agreements, negotiated and signed by the bulk of the
world’s trading nations and ratified in their parliaments. The goal is
to help producers of goods and services, exporters, and importers
conduct their business.